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Canada economy grows more than expected, boosting recovery hopes | Business | Reuters
Canada economy grows more than expected, boosting recovery hopes | Business | Reuters.
By David Ljunggren
OTTAWA (Reuters) – The Canadian economy showed unexpected strength in October, growing for the fourth month in a row and boosting market hopes that the country might finally be shaking off the worst of the great recession.
Statistics Canada said on Monday the economy had grown by 0.3 percent from September. Analysts had forecast a 0.2 percent advance after September’s 0.3 percent increase.
Although Canada regained most of the jobs it lost since 2008 and 2009, growth has been largely sluggish, prompting the Bank of Canada to make clear it will not raise its key interest rate until it sees signs of a firm recovery.
The economy has posted growth every month this year apart from June.
The output of goods-producing industries grew by 0.4 percent in October on higher manufacturing while service industries output climbed by 0.3 percent as almost all major industrial sectors registered growth.
“Canada’s economy is showing sustained strength for the first time since the early days of the recovery,” said BMO Capital Markets economist Sal Guatieri.
The Bank of Canada has said annualized GDP growth in the fourth quarter will be 2.3 percent, down from 2.7 percent in the third. Guatieri, though, said October’s data suggested fourth quarter growth could be around 2.6 percent.
“Importantly, this would mark the first quarter since early 2011 that GDP has posted successive increases above two percent – that is, above potential,” he said in a note to clients.
Manufacturing output grew by 1.3 percent in October while wholesale trade and retail trade advanced by 1.4 percent and 0.3 percent respectively. Construction, as well as mining, quarrying and oil and gas extraction, were unchanged.
The economy grew by 2.7 percent from October 2012, up from September’s 2.4 percent year-on-year advance.
Peter Buchanan of CIBC World Markets said the 0.3 percent increases in both October and September “suggest a fairly decent start for the economy to the fourth quarter.”
The data helped push the Canadian dollar higher and by 9.40 am (1440 GMT) it was at C$1.0601 to the U.S. dollar, or 94.33 U.S. cents, up from Friday’s close of C$1.0648 to the greenback, or 93.91 U.S. cents.
The Bank of Canada is worried about the risks posed by the persistently low inflation, which in November was just 0.9 percent, well below the central bank’s target of 2 percent.
The Bank has kept its key overnight interest rate unchanged at 1 percent since September 2010, citing in part the inflation rate and the underperforming economy.
A Reuters poll of primary dealers late last month showed that most did not expect the bank to raise rates until the second quarter of 2015.
(Reporting by David Ljunggren; Editing by Nick Zieminski)
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Canada inflation picks up but still in danger zone | Business | Reuters
Canada inflation picks up but still in danger zone | Business | Reuters.
By Louise Egan
OTTAWA (Reuters) – Canada’s annual inflation rate crept up to 0.9 percent in November from 0.7 percent in October but it remained below the central bank’s target range, ensuring that chronically weak inflation will stay on policymakers’ radar as a top concern.
The Canadian dollar weakened to a 3-1/2-year low against the U.S. dollar after the Statistics Canada inflation report, which confirmed analysts’ expectations that steep discounting by retailers around “Black Friday” would prevent inflation from gaining much momentum in the near term.
A separate report from Statscan on retail sales in October showed unexpected weakness in the sector as purchases of cars declined.
The consumer price index was flat month on month, with the annual CPI rate pushed higher mainly by shelter and food costs, while prices fell for health and personal care as well as for clothing and footwear.
But the annual core CPI, closely watched by the Bank of Canada because it excludes volatile items such as gasoline and food, slipped 0.1 percentage point in the month for an annual rate of 1.1 percent.
Both the total and core inflation rates were slightly below market expectations of 1.0 percent and 1.2 percent, respectively.
“From a policy perspective, (it) helps fuel the growing narrative that the Bank of Canada is becoming increasingly more dovish,” said Mazen Issa, a strategist at TD Securities.
“Certainly the risk that the bank adopts an explicit easing bias in January continues to grow and this report lends further credence to that view,” he said.
Bank of Canada Governor Stephen Poloz told Reuters this week the bank’s stance on monetary policy is neutral, but he acknowledged it is “having trouble explaining” why inflation is so weak, as well as being puzzled by poor exports and business investment in the context of an improving U.S. economy.
The bank first explicitly stated an increased concern about low inflation in its October 23 interest rate decision, when it shifted into a neutral after 18 months of leaning towards rate hikes.
This month, it warned that heightened competition in the retail sector appeared more persistent than anticipated.
More retailers in Canada, including Target Corp (TGT.N: Quote) and Wal-Mart Stores Inc (WMT.N: Quote), have been running Black Friday sales in November even though Canadians celebrate Thanksgiving in October, as they try to keep customers from crossing the border for better deals.
In the United States, this shopping season is expected to be the most competitive since the financial crisis of 2008, with retailers discounting heavily to woo cautious shoppers.
Inflation has been below the Bank of Canada’s 2 percent target for 19 months. For seven of the past 13 months it has been below the 1 to 3 percent range the bank tolerates.
The latest figures suggest inflation will be below the Bank of Canada’s latest estimate of 1.3 percent average CPI in the fourth quarter. The bank will update its forecasts on January 22.
“I do think the real story here is on core inflation, the fact that we’re now just about scraping the very low end of the comfort zone for the Bank of Canada, and I do think it’s largely due to the heavy duty discounting we’re seeing among a number of retailers,” said Doug Porter, chief economist at BMO Capital Markets.
“So it’s a fairly big miss by the bank on core inflation.”
The Canadian dollar weakened after the report to C$1.0700 to the greenback, or 93.46 U.S. cents, from Thursday’s close of C$1.0666, or 93.76 U.S. cents.
RETAIL VOLUMES TO FUEL GROWTH
Retail sales unexpectedly fell by 0.1 percent in October from September as a downturn at car dealerships offset upbeat supermarket sales. Market analysts had forecast a 0.2 percent increase in monthly sales.
The weak reading followed three straight months of gains as four of the 11 retail subsectors declined.
However, in volume terms, retail sales grew 0.2 percent in October.
The data, combined with strong readings in manufacturing and wholesale trade in October, suggest the economy will grow at a healthy clip in the fourth quarter, although below the 2.7 percent annualized growth seen in the third.
Overall sales at motor vehicle and parts dealers fell 1.9 percent. New car sales slid 1.6 percent after a 4.6 percent surge in the previous month. Gasoline station sales fell 1.6 percent.
On the other hand, food and beverage stores registered a 1.7 percent jump in sales.
Total sales excluding the auto sector grew 0.4 percent.
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Auto Makers’ Channel Stuffing Highest Since 2005 | Zero Hedge
Auto Makers’ Channel Stuffing Highest Since 2005 | Zero Hedge.
While the abundance of commercials for cars across all media this time of year is nothing new, the manufacturers (and even more so the dealers) are likely getting more desperate. As Bloomberg reports,inventory climbed to almost 3.4 million cars and light trucks entering November – at 76 days of supply, that was the highest for the month since 2005. This should come as no surprise as we previously noted GM’s post-crisis highs in channel stuffing as hope remains high that the recent slowdown in sales does not continue. The question, of course, is, “will manufacturers be responsible and curb production to keep inventory in check, or are some going to resort to old, bad habits and churn it out and then throw incentives on them.” We suspect we know the margin-crushing answer.
the levels harken back to early in last decade when steep price discounting was used to prop volumes,…
Excluding 2008 when the industry was heading into recession, LV inventory totaled 3.397 million at the end of October, highest for the month since 3.803 million in 2004. October’s 76-day supply, was the highest for the month since 77 in 2005.
By comparison, sales in 2013 mostly have run at highs dating to 2007, suggesting inventory is getting ahead of the curve.
GM just saw the biggest two month jump in inventory in the restructured company’s history.
Carmakers have boosted production to meet demand that has left the industry on pace for the best sales year since 2007. Swelling supply raises the stakes for sales in November after deliveries missed estimates in October and slipped in September for the first time in 27 months. If buyers don’t absorb enough inventory, more automakers, including Toyota Motor Corp. (7203) and Honda Motor Co., may need to follow Ford Motor Co.’s lead by trimming production to avoid margin-slicing discounts.
“Inventory has been so tightly managed, and it has been because demand has been there and production hasn’t been able to keep up,” Jeff Schuster, an analyst with researcher LMC Automotive, said in a telephone interview. “If you change that scenario around, the question is, does the discipline that we’ve seen the industry operate with lately stick around?”
…
“As the market begins to slow down and begins to peak, it’s going to get tougher for everybody,” Joe Langley, the head of North American vehicle production analysis for IHS Automotive, said by telephone. “Are manufacturers going to be responsible and curb production and keep inventory in check, or are some going to resort to old, bad habits and churn it out and then throw incentives on them? That’s what’s going to be interesting, to see how that plays out.”
…
Wesley Lutz, a Chrysler dealer in Jackson, Michigan, said his store has about 120 days supply of vehicles in stock, roughly double what he usually likes to carry. Lutz cited his anticipation of strong winter and spring selling seasons and his ability to borrow at less than 2 percent to finance the inventory on his lot.
“I’m probably not managing my inventory as well as I do at 8 percent, but I’m willing to roll the dice and stock some inventory in December and January, because I think we’re going to have a great market in February,” Lutz said by telephone. “We’re borrowing money so cheaply.”
…
“If it’s an underwhelming month, we’ll need to look to see if there are any decisions to start to ratchet back” production this month or in January, LMC’s Schuster said. “It could end up being the first real test that the industry’s faced since the restructuring.”
Sadly, there it is – due to intervention-driven low rates, mal-investment occurs from the bottom-up – and now we have the most inventory in 8 years… car makers and dealers (perhaps more so) will be hoping hard this season… the ‘field of dreams’ economy continues
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10 Facts About The Growing Unemployment Crisis In America That Will Blow Your Mind
10 Facts About The Growing Unemployment Crisis In America That Will Blow Your Mind.
Did you know that there are more than 102 million working age Americans that do not have a job? Yes, I know that number sounds absolutely crazy, but it is true. Right now, there are more than 11 million Americans that are considered to be “officially unemployed”, and there are more than 91 millionAmericans that are not employed and that are considered to be “not in the labor force”. When you add those two numbers together, the total is more than 102 million. Overall, the number of working age Americans that do not have a job has increased by about 27 million since the year 2000. But aren’t things getting better? After all, the mainstream media is full of headlines about how “good” the jobs numbers for October were. Sadly, the truth is that the mainstream media is not being straight with the American people. As you will see below, we are in the midst of a long-term unemployment crisis in America, and things got even worse last month.
In this day and age, it is absolutely imperative that people start thinking for themselves. Just because the media tells you that something is true does not mean that it actually is. If unemployment was actually going down, the percentage of the working age population that has a job should actually be going up. As you are about to see, that is simply not the case. The following are 10 facts about the growing unemployment crisis in America that will blow your mind…
#1 The percentage of working age Americans with a job fell to 58.3 percent in October. The lowest that number has been at any point since the year 2000 is 58.2 percent. In other words, there has been absolutely no “jobs recovery”. During the last recession, the civilian employment-population ratio dropped from about 63 percent to below 59 percent and it has stayed there for 50 months in a row. Will the percentage of working age Americans with a job soon drop below the 58 percent mark?…
#2 The U.S. economy lost 623,000 full-time jobs last month. But we are being told to believe that the economy is actually getting “better”.
#3 The number of American women with a job fell by 357,000 during the month of October.
#4 The average duration of unemployment in October 2013 was nearly three times as long as it was in October 2000.
#5 The number of Americans “not in the labor force” increased by an astounding 932,000 during October. In other words, the Obama administration would have us believe that nearly a million people “disappeared” from the U.S. labor force in a single month.
#6 The number of Americans “not in the labor force” has grown by more than 11 million since Barack Obama first entered the White House.
#7 In October, the U.S. labor force participation rate fell from 63.2 percent to 62.8 percent. It is now the lowest that it has been since 1978. Below is a chart which shows how the labor force participation rate has been steadily declining since the year 2000. How can the economy be “healthy” if the percentage of Americans that are participating in the labor force is continually declining?…
#8 If the labor force participation rate was still at the same level it was at when Barack Obama was elected in 2008, the official unemployment rate would be about 11 percent right now.
#9 Even if you are working, that does not mean that you are able to take care of yourself and your family without any help. In fact, approximatelyone out of every four part-time workers in America is living below the poverty line.
#10 In January 2000, there were 75 million working age Americans that did not have a job. Today, there are 102 million working age Americans that do not have a job.
So what are our politicians doing to fix this?
Shouldn’t they be working night and day to solve this crisis?
After all, Barack Obama once made the following promise to the American people…
“But I want you all to know, I will not rest until anybody who’s looking for a job can find one — and I’m not talking about just any job, but good jobs that give every American decent wages and decent benefits and a fair shot at the American Dream.”
Unfortunately, things have not improved since Obama made that promise, but he has found the time to play 150 rounds of golf since he has been president.
Meanwhile, because there aren’t enough jobs, the number of Americans living in poverty continues to grow.
As I wrote about the other day, according to new numbers that were just released an all-time high 49.7 million Americans are living in poverty.
And right now 1.2 million public school students in the United States are homeless. For many more statistics like this, please see my previous article entitled “29 Incredible Facts Which Prove That Poverty In America Is Absolutely Exploding“.
The only thing that most Americans have to offer in the marketplace is their labor. If they can’t find a job, they don’t have any other way to take care of themselves and their families.
The future of the middle class in America depends upon the creation of good jobs. It really doesn’t matter how far the quantitative easing that the Federal Reserve has been doing pumps up the current stock market bubble. The American people were told that “economic stimulus” was the reason for doing all of this reckless money printing, but the percentage of working age Americans with a job is now actually lower than it was four years ago. Quantitative easing has been a complete and total failure in the job creation department, and it is doing a tremendous amount of long-term damage to our financial system.
The really frightening thing is that the Federal Reserve and the federal government have supposedly been doing all they can to try to “create jobs” and they have utterly failed. In fact, this is the first time in the post-World War II era that we have not seen an employment recovery following a recession.
And now the next wave of the economic collapse is rapidly approaching. What that hits us, millions more Americans will lose their jobs.
So the truth is that this is just the beginning of the unemployment crisis in America.
Yes, things are bad now, but soon they will get much worse.
Olduvaiblog: Musings on the coming collapse 